Ignore history and it will bite you in the butt, a Parable about Behavioral Insanity

September 23rd, 2011

Economic History

Then & Now

A Parable about reckless behavior.

If we deny history

We are destined to repeat our mistakes.

 

 

The Roaring 1920’s and the economy

                            a 

                 Forest  Parable

The 1920’s and the Roaring economy

Study history so we don’t make the same mistakes again

                                    by

                      Charlie Champion  

The forest was filled with a cacophony of  excitement .

Times were good, and the living was easy.

Several years of plentiful rainfall, moderate winters,  and warm nurturing Springs had turned the forest  into a virtual paradise . 

Food was plentiful.

 The predators had been hunted nearly to extinction by the two legged’s. Those that were not killed had left  for the deep unknown forest  far far away.

The cries, squeaks, craws et. al., of the new babies filled the air .

No predators meant bigger families, but the bounty provided by Mother Nature kept all, well fed. 

The wise old Badger was the local  leader, but his stories and warnings were causing the younger animals  to loose patience . He had lived a long life and was experienced in the  ways of nature . He was concerned that the bad times would come back. The younger animals who had never experienced  the fury of Nature ,refused to believe him..

“Yes my friends.” he warned, ” many of you are young. You do not remember the hard times from before.”

He looked around the clearing.” The Winters are not always so easy. There have been many years when we’ve been plagued by severe drought. ”

   He shook his head sadly,”When the streams dry up, then hunger comes to the forest.”

” Oh go on old man!”  Patty Bunny stamped her foot.” Who has time for sad old stories. Old stories are boreing.”

” Don’t say that,”he responded sternly.”To ignore history is to run the risk of repeating your mistakes.”

“Boo on you” said Ronnie rabit.

“Enough already ,” rasped Willie Weasle,” Lets live the good life. It’s time to party.This is the way it’s always going to be.”

“yada ,ya, ya” They hopped off giggling  and whispering.

Several months passed. The Summer was a distant memory.

A large volcano errupted off the coast. The sky was turned grey almost 750 miles distant.

The weather patterns were  changed. A noticeable drop in temperatures became apparent.

The wild fruits and berries never fully ripened, the tubes and bulbs were underdeveloped.

It was 4 or 5 degrees colder, and..  it it almost never rained.

Food became scarce . No one was prepared.

There were not enough stored acorns.

No stockpiled food.

Shortages developed almost overnight.

And the predators returned!!! Driven by hunger spurred by the drout and the very cold winter.

The happy well fed party generation disappeared in an avalanche of change.

Painful change.

Society altering change.

The 1920’s and the Economy

Want to read more?

Just ask.

The Relationship of Economics to History II

September 23rd, 2011

Economics is a way of keeping score.

Economics is the way we are able to feed ourselves.

Economics is the engine that drives history.

The quest for quantitative gain, either in wealth or sustenance has been the propellant for most wars,  the march of  invading armies, and the annexation of  neighbors lands.

Economics is the fuel which drives society.

From the beginning of human history, people banded together first in clans, and ultimately in tribes and later nations, all with the original need to feed and protect.

To control the source of food and to allocate its distribution was an economic power that could decided life and death.

As society evolved, the symbiotic relationship  economics and history strengthened.

Today, the state of our economy has once again devolved to a more basic level. The days of indiscriminate spending on increasingly absurd possessions are fast disappearing.

Now we have turned into a dependent society.

We expect to be taken care of,,

Thank god for Obama and his Progressive minions.

Our needs are no longer our responsibility.

Pay my heating bills.

Buy my food.

Provide my health care.

Subsidize my rent.

Pay me not to work.

Life is good.

Life is easy

etal……

Do Not Believe the Wall Street Rally

August 12th, 2011

My dear friends,

I have told you a number of times during the past 24-36 months, ” do not believe the short term  rallies in the market.”

The economy is in bad shape, and still needs another 18 months to bottom out.

This is assuming that Obama does not get reelected.

If he wins a second term, all bets are off.

When I say bottom out, the last part of this shakeout will be the worst part. As a people we Americans are very adaptable, and have a short memory.

They have gotten us used to a lower standard of living. Gas at 3.75 a gallon is better than 4.25, but still better part of .80-.90 higher than last year.

We are told to drive less, to carpool, and to stock up on sweaters for the winter.  …And  we do it, setling into a less comfortable standard of living.

We are told the rest of the World will love us again if me freeze in the winter, sweat in the Summer,  eat less , and stock up on foods that are generic, and cheaper, meanwhile less fresh and healthy.

Well the rest of the world does not love us, and eating cheap fatty foods is well represented in the spreading rear ends of the American population.

I don’t want to be cold in the winter. I don’t like bulky sweaters. I’ve worked all my life and feel that i’ve earned the right to wear what I want, and heat and air condition my surroundings any way that I choose.

All we have to do is find or keep a job, and pray that inflation and a dropping Stock Market doesn’t wipe out what little we have leftafter loosng our homes.

Sell this bill of goods to someone else.

Beware the Market, especially if the Tax and spend party wins again and does its thing.

America we are in trouble

A Perception of our Future, The Good* The Bad* The Very Ugly, View # 3 The Very Ugly,part I

August 6th, 2011

    When the going gets tough, our leaders look for someone else to blame. Someone else caused the problem.

     For the first 5 years of his administration, President Obama beat on the Bush legacy.

     It was Bush who caused the depression of 07.

     It wasBush who caused the housing crash,

     It was Bush who caused the great Wall Street collapse of 2011-2013.

     Bush created Fannie & Freddie mortgage abuse.

     It was Bush who squandered $ trillions to stimulate the economy, pushing us into an unfunded debt position approaching $100 trillion and counting.

     When the American people finally got tired of the “demon” Bush legacy, the Progressives followed the tried and true path laid out by their Icon ,FDR, and pushed the foolish, but widely accepted, notion that a good expensive war is a savior for the economy.

     “After all, war pulled the United States out of the last Depression, becomes the mantra of a government with little will for hard economic choices.

     The alternative of a greater  war to rescue the economy of the Nation is a grim solution which many find unavoidable.

     The parameters of an exploding  World War III have been fermenting for hundreds of years. 

     The West has been under increasing attack during the past century, with the conflict becoming up close and personal on 9/11/2001.

     While the Progressives have developed an entendre with redical Islam, the opportunity to turn this errupting crisis into an opportunity for political and economic gain is embraced.

     Europe becomes the initial battleground for this conflict, but the soft Muslim underbelly of the Continent makes Europe a hellish place for several decares.

     Terror , reprisals, and retalliations destroy the economies of many countries, and leaves their populations bitter and suspicious.

     North America will become a locked down fortres,  resulting in the stifling of much of our freedoms both civil and economic.

                           End of Part 1 More later

A Perception of Our Future,* The Good * The Bad * The Very Ugly, View # 2 The Bad

July 19th, 2011

The Worlds Leftist Leaning governments sell their populations  on the concept of fiat money.

They embrace  the Keynesian economic theory that printing massive amounts of paper money  will solve the world’s daunting economic woes, when in fact the printing is a core problem with the system.

Over time, most currencies lose most of their value.

Inflation runs rampant, destroying the middle class. This has the effect of handicaping the most productive people in society; the primary segment in society that produces more tha they consume.

The negative economic climate leaves succesful corporations with $billions in cash, reluctant to expand in the turbulent  environment.

Rather than hold large sums of currency, they use the “stimulus” money to but their own stock, or to fund mergers and acquisitions.

This infusion of corporate cash into the stock markets, results in a stock market boom in the midst of a spreading depression.

The U S Government, believing that it has the obligation to “make everything fair, and to spread the wealth” embarks on new draconian ways to control the economy.

Price controls.

Wage controls.

Limiting Corporate compensation.

Eliminating corporate tax write offs “labeled tax loopholes” takes away incentives for investments in new technology

Petroleum products become increasinglt expensive and rationing becomes the accepted norm.

A Government agency is set up to enforce the mountain of new laws and regulations.

The population becomes increasingly  dependent upon the government for survival.

Politics becomes the best way to manipulate the masses, and the surest way to accumulate wealth at the public trough.

The flow of people fleeing the United States turns into a Tsunami, as life becomes increasingly grim and restrictive.

Perceptions of Our Future * The Good * The Bad * The Very Ugly* View #1 The Good

July 11th, 2011

                                           

                                       VIEW # 1 THE GOOD

Word leaders have an epiphany and come to the realization that keeping interest rates artifically low , is having the effect of destroying their currencies.

Cheap money and flooding the markets with unbacked paper currency is having the effect to diluting the wealth of their citizenry.

The resulting creeping inflation is lowering the living standards worldwide.

This is  creating scarcity as more paper chases a finite amount of consumables, including food, fuel, and clean water.

The realization that we are creating a scenario where bailouts will continue to grow, leads out wise leaders worldwide, to make a series of dramatic fiscal decisions, beginning with a return to a gold backed currency.

Interest rates are allowed to rise, and ” Too Big ti Fail” becomes ” Too Big and Expensive to Save.”

The Federal Reserve is closed and a return to Fiscal Responsibility is reluctantly agreed to by the President and Congress.

There are massive protests, and disruptions in the economy resulting in the Government downsizing for the first time in 100 years.

Useless and duplicate departments are closed.

Many taxes are lowered or eliminated.

40% of Federal employees are let go.

The Military closes 90 % of foreign bases, and brings the troops home.

The war on drugs is ended, and crime rates in Mexico, and the United States drops radically.

Controlled devaluation of the dollar  is instituted, and much of out national debt is brought into line by the painful readjustment of our economy to a sustainable level of work and direct reward.

When our entreprenurial spirit is allowed to grow without heavy regulations, our economy begins to respond.

Our GDP embarks upon a decade of unprecedented growth, reaching 6-7% a year, and ushering the new Golden Age of Civilization.

Is This 1937 or 2011 Deja Vou Part II

June 14th, 2011

Is This 1937 or 2011 Deja Vu Part II

June 9th, 2011

With QE2 ending at the end of June, the Treasury Department will be forced to go back to global markets in order to sell Treasury Bonds.

Interest rates are sure to rise, dealing a severe blow to the already fragile recovery.

Federal Reserve Chairman, Ben Bernanke’s Qualitative Easing plan has failed to stimulate economic growth, but has done a masterful job of encouraging inflation and a weakening dollar.

Armed with a printing press, and some  obsolete economic theories, he  is fated to  become a Quixotic figure  in World history.

A printing press should be used for printing books, instruction manuals and even Bibles, but not to stimulate free enterprise economic growth and investments.

The insidious  inflation is having the result of disrupting economic growth, rather than encouraging it.

How can an entreprenure invest in a new enterprise when inflation makes price stability questionable.

This coupled with increasingly stringent government regulations and the onset of Obamacare have done a masterful job of strangling the economy.

According to a recently released report, the combined public and private sectors of our economy spend upwards of a $2 billion just on interest on all our debt.

The borrowed money which this interest services, has been spent on consumption rather than capital investment.

This is leaving nothing available for real growth or new creations.

QE2 has done nothing but service our debt and given a momentary artifical bounce in an otherwise floundering economy.

The current and proposed future taxes which are being piled upon the “wealthy” (ie the entreprenure) is making the  economic recovery  increasingly reminiscent of a black hole.

More Later

Is This 1937 or 2011 Deja Vu all over Again

June 9th, 2011

Well dear friends, QE2 is comming to an end,

What does that really mean, and what has all the fuss been about?

We put cute names and labels of earth shaking actions to make them pallatable to the average person, but the real intention is to hide the reality of what is happening.

QE2 or Quantitative Easing is another way of saying that the United States Federal Reserve has printed $ 600 Billion out of thin air and used this freshly inked paper to purchase 85 % of the Treasury Securities issued in the past 6 + months.

This giant Ponzi scheme has allowed the Fed to keep interest rates artifically low while flooding the market with inflationary paper, which has been used to pay the interest on our national DEBT.

What? We are printing money out of thin air, and using this to buy our own bonds?!!

As of June 30th, this program will end.

Now what!

How will we be able to continue selling $Trillions of new Treasury securities and record low rates of interest?

The answer is we won’t.

After this program ends, we will have to look to foreign buyers.

China, Saudi Arabis, possibly France and other Euro nations, as well as some hostile people with huge petro dollars such as Iran, Venezuela, et al.

Will these foreign nations be willing to lend us money at depressed interest rates.

HELL NO!!!

The days of cheap money are destined to come to a swift end.

5%, 6%,and higher are in our immediate future, and the drag on a very fragile economy will drag us to the precpice of a precipitous drop.

More later,

Counting the Budget Deficit in Real Numbers!

April 16th, 2011

The fiscal disaster which is the U S Federal budget, and the tidal wave of debt( Tsunami,sorry I have dated myself) which is threatening our Nation, is a well documented reality.

I have been listening to the arguments between Liberal and Conservative pundits, and there is one serious problem with both sides of this debate.

Both sides acknowledge that the  budget deficit is approx $1.7 trillion this yeat, and a $ 13-14  trillion unfunded debt also exists.

O K , I acknowledge the reality of our fiscal horror show.

BUT, what is 1.7 trillion? How about letting the public know the real number. Try $ 1700 billion. Yes thats right, the glib $ 1.7 trillion deficit in real dollars is 1700 BILLION,  of 1,700,000 MILLION.

Those numbers are all the same,but the spelled out number is truly staggering. 1.7 trillion is 1700 Billion .

How about our acknowledged debt of $ 14trillion. This is where our debt ceiling is right now. 14 trillion is 140,000 Billion dollars. A number which gives me a headache to comprehend.

Yet Obama and the Democrats are treating it as monopoly money and throwing around 1.6 or 14 trillion  without really telling you the desperation of the numbers.

Take a minute or possibly a hour and try to actually write out the number longhand.

Blows your mind doesn’t it